Understanding Political Economy And Welfare State In Ireland

Development of Irish economy since independence

1. Explain how political economy can help us understand the Irish economy? outline the development of the Irish economy since independence.what, in your opinion, were the key economic decisions that shaped the Irish economy over this period?

2. What are the origins of the modern welfare state and what is its purpose?please outline the case for and against one of the following in the Irish context:  more universalism; a stronger insurance system, or more targeting. what are the criticisms of the welfare state from the political left and from the political right?

Political economy is considered to be an important aspect in understanding the economic condition of a country. The political economic aspect, however, has a close relation with the practice of welfare state. Hence, this article is dedicated to discuss various facts of political economy in Ireland and emphasised on the understanding of economic progress in the country. Moreover, it will also incorporate the ideology of welfare state and the way it contributed to the national economy in Ireland.

The notion of political economy has a close affinity with the elements of standard economic concept. In this regards, it can be argued that the political economy determines the role of the state in the economic and social organisation of a country.

In the economic spectrum, Ireland is identified as one of the poor countries in Europe with a small proportion of equality and economic leadership. In fact, the ramification in Irish economy has been varied with the difference in sectors related to the society (Schmidt and Thatcher 2013). In this context, Ireland is started to enter the global market in a rapid pace and willing to participate in the global market occupation. The Irish economy is considered to be the 6^th freest in the 2018 index (Crotty and Schmitt 2014).

In this matter, the political transformation left a deep impact on the economy of the country. There are public debt and deficit reduction measures which are associated with economic recovery of the country. However, low taxes and introduction of technological advancement help the country to attract more potential investors.

The government policy of Ireland is strongly deviated from the international platform where the country is not corroborated with the vision of European Union. For instance, in 2017, the proposal of the European Commission to increase the internal corporate tax of Ireland was straight forwardly refuted by the nation (Mercille 2014). In fact, Scotland also opposed the suggestion of the European Union to screen the foreign direct investment. In this regards, it can be argued that the political stand point of the country shapes the condition of economy of Ireland.

Key economic decisions that shaped the Irish economy

The current statistics estimated that over 70,000 people in Ireland have rented accommodation. In fact, the number of people renting their home is increasing in a rapid pace. The demographic data reflects that couples from the age of 20 to 30 are the traditional occupants of house rents. Besides this, individuals and families in their 30s, 40s and 50s also acquire house rents.

Buildings insurance is considered to be one of the important factors to cover up. In this regards, the home emergency cover, legal and liability insurance, loss of rent and covering the4 property are the main constraints.

Ireland got its long aspired independence in the year 1922 as British Prime Minister Lloyd George released the dominance of fiscal autonomy over Ireland through the Treaty negotiations (Bourke and McBride 2016). Since then the Irish government are trying to form a solid economic establishment for the future sustainability of the country.

During the first decade of the independence the Irish economy was primarily focused on agriculture and labelled it as the primary driving force that was able to boost up the economy of Ireland. Besides this, the government opened the export market and in return started to import raw materials for the local investors. However, with the coming of the great depression in 1929, with the rapid shift in global market, the Irish market also transformed itself in a rapid swing. As a result of that the liberal approach in economics had been altered by the presence of protectionism and heavy duties were imposed on imports. The Control of Manufactures Act of 1932 further nailed the last possibility of foreign investment (Gerlach, Lydon and Stuart 2016). This protectionist policy was continued till 1966.

By 1970s the role of the state became very extensive but yet not adopted socialism. As a result of that the country witnessed high tax burden in the on the economy and deterrent to private enterprise. The tariffs with European countries had been started since 1973 and Ireland was going to join the European Economic Community in 1973. The government transformed their economic perspective towards an export oriented FDI which led to the foundation of Industrial Development Authority (IDA). In 1996 the IDA helped to develop 1040 companies and employing 97,472 people which was accounting 44% of the total manufacturing employment (Stuart 2016). This was also the time when industrialisation in Ireland was in its flourishing point but lack of government understanding perturbed the economic development in Ireland which the nation is still dealing with.

Origins and purpose of the modern welfare state

 There are a number of major decisions, shaping the economic condition of Ireland, such as, the Control of Manufactures Act of 1932. According to this act Ireland prohibited any kind of foreign investment and the economic depression of 1929 pushed the country to follow such a protectionist policy in economy. It led to an economic degradation of Irish economy (Black 2015).

In this regards, the Anglo-Irish Free Trade Agreement in 1966 was considered to be an important decision for the Irish government for dismantling the stagnation which was resulted due to the protectionist policy of Ireland. This free trade agreement was identified as an impetus, led the country towards industrialisation (Berend 2016).

Moreover, the foundation of Industrial Development Authority (IDA) was an outstanding step for the Irish economy. Though the IDA had come into action from 1949 but it achieved success in 1996 when 44% of the total manufacturing employment of Ireland was created through the IDA (Norris 2016).

From mid 1990s to the late 2000s the Irish economy was booming in such a pace that between 1995 and 2000 the country had witnessed an economic expansion of 9.4% at an average. The term Celtic Tiger was coined in the Morgan Stanley report of 1994. The period of Celtic Tiger was also identified as Irish Economic Miracle.

A major European report has implied that Ireland’s over reliance on private market as a key factor in the ongoing crisis. As a result of that the due to the stagnation in the construction industry, it was also imposed great impact on the economy of Ireland.

 There are a number of interpretations regarding the origin of modern concept of welfare state. It can be argued that the general idea of modern welfare state came at the very end of Second World War. It was widely identified that with the implementation of Sir William Beveridge’s celebrated report on Social Insurance in the post-war British Labour Government was considered to be the foundation period of modern concept of welfare state (Flora 2017). In this regards, the term welfare state was popularly referred to the post-war Allied reconstruction.

In the light of the origin of welfare state it can be stated that the concept of welfare state was supported by the perception of a preventive measure that can stop any kind of future revolution.

However, people often mistake to perceive that it is a positive move towards the people and the citizens get benefit from it. However, it is not a derogatory idea rather it usher a radical approach of preventing riots and revolts by supplementing employment and education for all (Eger and Breznau 2017). In this regards, the sole purpose of Welfare State is to create a social and economic well-being for the citizens of a country by providing equal opportunity and wealth to the public.

Case for and against more universalism, a stronger insurance system, or more targeting in the Irish context

In this discussion, it can be identified that the idea of welfare state was the brainchild of German Chancellor Otto Von Bismarck. It was the initiative of Bismarck to set up a traditional welfare program in Prussia in the early 1840s (Holyoake 2016). However, in United State, the notion of Welfare States became popularised in 1930s with the coming of great depression.

 Universalism in a broader canvas is defined as coexistence and thought in a global perspective. There are a number of concepts related to the idea of universalism. However, in this discussion political universalism will be the focal point. In this context, political universalism is identified as a unification of power and global institutions under the canopy of a global spectrum (Van Lancker and Van Mechelen 2014). On the contrary, particularism thinks just the opposite of universalism. It discusses the individual orientation or self orientation in terms of a person as well as for a nation. These two concepts are very essential for understanding the role of welfare state.

In Ireland, recession hit the country in 2008. Although, in reality the process of austerity has come into place much before the year 2008. Since 2000 and the policy making procedure of Ireland were futile and became irrelevant in time. As a result of that the country witnessed protests and movements across Ireland. In fact, the protests created a platform for the citizen to evoke the same words as it was used during the bankruptcy of the Greece. In this way, the link between Greece and Ireland in case of the economic condition facilitated the way to develop universalism (Meade 2014). In Ireland the people celebrate the Nordic model of universalism.

By doing an analysis on the prevalence of universalism in Ireland, it can be stated that universalism generates the policies of reducing the child poverty, decreasing the poverty percentage among women and creates a scope for the women to participate in the labour force in a greater number. Besides this, there is another advantage of universalism. The advent of globalisation renders an open market for all and provides an intense competitiveness among the enterprises. As a result of that the nation will be on the receivers end to enjoy the benefits of globalisation and able to continue her economic development.

Despite of all the positive outcome of Universalism, there are also some disadvantages such as high level of employment demand, increasing trend in taxation and stagnation of fiscal policy which are very much detrimental for any developing nation like Ireland.

Criticisms of the welfare state from the political left and from the political right

There are an array of enmity between the ideas of welfare state and right wing politics. The traditional perception opined that right wing politics is just the opposite of the notion of welfare state. For an instance, the welfare state promotes equal share of wealth and opportunity among the citizens but in case of the right wing principle cutting down the public spending in an emphatic manner is supposed to be followed (O'connor 2017). However, the new right ideology expresses a different understanding though pointed out the loops of welfare state by alleging higher tax levels and budget deficits (Jakobsson and Kumlin 2017).

On the other hand, the ideology of welfare state is argued to be supported the political left. Social equilibrium with a similar approach of creating maximum opportunities for the labour class is strictly connotes the left wing politics. However, the leftist mentality criticises welfare state by arguing that it leads to bureaucratic despotism and in result it obstructs the way of social equality (Marx, Nolan and Olivera 2015).

Conclusion

It can be concluded that the concept of welfare state and its implication on the political economy of the nation was not enough to lead Ireland on to the pinnacle of economic progress. A number of factors like the implementation of the government, protectionism and most importantly the adverse effect of welfare state ideology perturbed the financial stability of Ireland which could be refurbished with the help of free trade economy.

Reference

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